September 13, 2016

Apple's new iPhone7 is not interesting

The terms that I would use to Wednesday's iPhone 7 introduction from Apple are "boring," "uninteresting" and "humdrum." Or as The Wall Street Journal put it, the iPhone 7 is Practical, But Not Jaw-Dropping.

Yahoo Finance tech writer David Pogue noted that "by now, everyone recognizes that the annual cycle of adding an earth-shattering life-changing feature to each new smart-phone model is over."

Indeed, I'm reminded of an old saying: "Risk-taking is inherently failure-prone. Otherwise it would be called 'sure-thing taking.'" But as Peter Drucker also once famously said: "If you want something new, you have to stop doing old."

Frankly, it was little surprise to me yesterday when Apple revealed, for example, that it had eliminated the headphone jack with the iPhone 7. The company described that move as an act of "courage," but that's a phrase usually reserved for more meaningful and serious events. You know Apple has a potential problem when even sports bloggers are making fun of this.

From my perch, Apple is running a big risk that consumers who are already a part of the company's ecosystem will figure out at some point that they're getting ripped off by all of AAPL's expensive, proprietary peripherals. Many want the freedom to use any wireless headphones that they want--including expensive ones they might already own--and could easily switch away from Apple products.

And to reiterate a point that I've made previously, other companies have already long offered many of the "additions" that Apple unveiled for the iPhone 7. For example, Apple proudly stated yesterday that the phone is water and dust resistant "for the first time in the iPhone's history." But some rival phones are already water-resistant, and I'd note that the iPhone 7 isn't actually waterproof.

As for the iPhone7's "new" dual-lens camera, some competitors began offering this feature around a year ago. And as for the camera's other features--a wide-angle lens, image stabilization, an image signal processor, etc.--they don't seem like a big enough deal to me to justify upgrading to the new phone.

What about the iPhone 7's much-touted vibrating home button? Apple proudly noted that this new button is "force-sensitive"--meaning that rather than knowing you pressed the button because it clicked, it will vibrate instead. The company's marketing chief said this creates "new feelings and experiences that could not have been created before."

Nonsense! Competing products have had vibrating keys for years. Apple finally does it with one button and the company has the gall to try to spin that as some sort of innovation?

Apple also remains behind Alphabet (GOOG) , Amazon (AMZN) and others in terms of developing artificial intelligence.

Lastly, the upgrades that AAPL announced to the Apple Watch are a big yawner. The new watch is essentially the same as the prior version, except that it can be used in a swimming pool and features some fitness-related features. Zzz.

I'll have more to say about this a little later, and will give my 12-month risk-vs-reward forecast for Apple.

Position: Short AAPL



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